everything in italics in my post was a quote from the original source, http://globalslant.com/2015/06/black-box-trading-why-they-all-blow-up/
So you'd have to ask him for the link I guess
GAT
All Black Boxes Eventually Crash
- Thread starter zdreg
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everything in italics in my post was a quote from the original source, http://globalslant.com/2015/06/black-box-trading-why-they-all-blow-up/
So you'd have to ask him for the link I guess
GAT
It's obvious to anyone with common sense- if they worked 100% we'd know about it,and clever people tend to fall harder than thick people like me. LTCM anyone?
I don't think anyone in their right mind, and who has more than a passing knowledge of the stock market, believes any black box works "100%". Your example of LTCM is a good one in that it shows that even the most "intelligent" people (intelligent by academic standards, at least) can make horrible trading or investing decisions. The Nobel Prize in particular seems to be an indicator that the person may believe too strongly in his/her models and is thereby blinded (temporarily) to "common sense reality". Keynes also was a repeated blow-up artist with his hedge funds, apparently.
Some of the comments surrounding the LTCM collapse were truly comical, like "this never should have happened in the lifespans of 140,000,000,000 similar universes" or something like that. In the harsh reality of which the principals seemed ignorant, the events that caused the blowup of LTCM are really pretty common, if one goes back into longer history (say the prior 100 years).
However, it's also true that some "black box" traders have been amongst the most successful in trading history -- for example, Renaissance Technologies' main fund Medallion. Every human endeavor has some chance of failing, and given enough time probably every financial system becomes worthless. But that doesn't negate the fact that some significant edges are discovered and utilized in the mean time.
I know of a black box that works 100% over a 'period' of time.